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Golar LNG Limited (NASDAQ:GLNG) Could Be Less Than A Year Away From Profitability

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  • GLNG

With the business potentially at an important milestone, we thought we'd take a closer look at Golar LNG Limited's (NASDAQ:GLNG) future prospects. Golar LNG Limited provides infrastructure for the liquefaction, transportation, and regasification of LNG. The company’s loss has recently broadened since it announced a US$274m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$335m, moving it further away from breakeven. Many investors are wondering about the rate at which Golar LNG will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Golar LNG

According to the 9 industry analysts covering Golar LNG, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$416m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of -26% is expected,

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Golar LNG's growth isn’t the focus of this broad overview, though, keep in mind that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Golar LNG is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Golar LNG's case is 45%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Golar LNG to cover in one brief article, but the key fundamentals for the company can all be found in one place – Golar LNG's company page on Simply Wall St. We've also put together a list of important factors you should look at:

  1. Valuation: What is Golar LNG worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Golar LNG is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Golar LNG’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.